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9 minutes ago, TobiasFunke said:

 For some reason (I suspect it was political, but perhaps it was practical or an administrative error or a combination of all of those), this reliance on others to set withholding has resulted in a lot of people getting much smaller refunds and in many instances owing more money to the federal government for 2018.

A cynic might think that the extra money in pay checks would be fresh in voters minds In November 2018, but the smaller tax refunds will be forgotten by November 2020.

 

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It was definitely a political move. They gave people more money upfront during the mid-term elections.

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10 hours ago, Walking Boot said:

OK, I still have TurboTax 2017 installed on my computer, so, just for funsies, I entered my 2018 info to compare the old tax plan and the new tax plan.

 

In 2017, my federal tax refund was ~$2000. In 2018, I expect I will owe ~$200.

My Total Income increased by about $10k between 2017 and 2018, (due to a raise and capital gains). My Federal Deduction is about $4k less. My Taxable Income is about $14k more. 

After adjusting withholding, my take-home paycheck ended up being about $50 more a week, too.

 

After running my info through TT2017 and TT2018, the bottom line 'Federal Taxes I Owe' under the "new" plan is $300 less than it would have been under the "old" plan. So I made $10k more and am getting charged $300 less in taxes overall. Despite the fact that I went from getting a $2k refund to owing $200, going to show that judging the tax plan by the size of your refund check is a fool's errand.

 

Yes people need to look at their effective tax rates to determine if they benefitted or not from the tax law change.  It's basically your tax liability divided by your taxable income.  It's the best way to compare apples to apples because while most people probably saw an increase in taxable income due to SALT limitations but with tax rates decreasing and credits increasing most people effective rates likely decreased.

 

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2 hours ago, TobiasFunke said:

Most people aren't accountants and don't employ one year-round. They depend on Treasury and their employer to set their withholding. They are entirely justified in doing so, as this reliance has gone smoothly and predictably for their entire lives. It's unreasonable IMO to expect these people to "consider this or plan accordingly." For some reason (I suspect it was political, but perhaps it was practical or an administrative error or a combination of all of those), this reliance on others to set withholding has resulted in a lot of people getting much smaller refunds and in many instances owing more money to the federal government for 2018.

The US govt. started withholding so that they would get their money first.  Given the exact behavior your talked about re: American citizen spending habits, if the UST didn't people would spend it all before tax time.  That said I completely agree that the UST hosed up the withholding tables.  We have historically put trust in their ability to be consistent and they failed.

 

2 hours ago, Tom Hagen said:

A cynic might think that the extra money in pay checks would be fresh in voters minds In November 2018, but the smaller tax refunds will be forgotten by November 2020.

Actually, I think it's the opposite.  Folks won't really see or feel the extra $40 (or whatever) in each paycheck.  They will, however, remember "getting screwed" with a smaller return, as most people judge their taxes by their return.  Virtually no one will calculate their effective tax rate. 

For the same reason we, as a country, seem to tolerate the rampant fraud that goes on at tax time with fake returns, etc.  A prudent country would gather all returns first, verify any inconsistencies, and then issue returns - quashing this fraud problem.  We, as a citizenry, allow the govt. to hold our money, then are upset if we don't get our money back in 2 weeks.  I shake my head at people sometimes.

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2 hours ago, Sand said:

The US govt. started withholding so that they would get their money first.  Given the exact behavior your talked about re: American citizen spending habits, if the UST didn't people would spend it all before tax time.  That said I completely agree that the UST hosed up the withholding tables.  We have historically put trust in their ability to be consistent and they failed.

 

Actually, I think it's the opposite.  Folks won't really see or feel the extra $40 (or whatever) in each paycheck.  They will, however, remember "getting screwed" with a smaller return, as most people judge their taxes by their return.  Virtually no one will calculate their effective tax rate. 

For the same reason we, as a country, seem to tolerate the rampant fraud that goes on at tax time with fake returns, etc.  A prudent country would gather all returns first, verify any inconsistencies, and then issue returns - quashing this fraud problem.  We, as a citizenry, allow the govt. to hold our money, then are upset if we don't get our money back in 2 weeks.  I shake my head at people sometimes.

here's another thing that we, as a county, seem to tolerate... 

We all work hard and pay our taxes ... lots of taxes. Pay our taxes or go to jail.

... yet I hear advertising on tv and radio ...."if you owe the IRS more than $10,000, call us and get off for a fraction of what you owe"

and testimonials from satisfied clients ... "I owed the IRS more than $50,000 ... and I only had to pay $2,000. Thanks a lot such and such a company!"

I want all of you to think about this when you look at how much taxes your paying this year. Somehow others are getting away with not paying taxes for years and get away almost scot-free.

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4 minutes ago, Bossman said:

here's another thing that we, as a county, seem to tolerate... 

We all work hard and pay our taxes ... lots of taxes. Pay our taxes or go to jail.

... yet I hear advertising on tv and radio ...."if you owe the IRS more than $10,000, call us and get off for a fraction of what you owe"

and testimonials from satisfied clients ... "I owed the IRS more than $50,000 ... and I only had to pay $2,000. Thanks a lot such and such a company!"

I want all of you to think about this when you look at how much taxes your paying this year. Somehow others are getting away with not paying taxes for years and get away almost scot-free.

This sends me right through the roof. How is this even allowed, these people getting off basically free. Makes me want to hunt them down.

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9 minutes ago, irish eyes said:

This sends me right through the roof. How is this even allowed, these people getting off basically free. Makes me want to hunt them down.

I'm a CPA and those ads are BS. The only way to get tax forgiven is if you don't make any money and don't have any assets. Some people fall under this and can settle for a fraction, most can't. 

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On 2/13/2019 at 12:05 PM, Steeler said:

 

It's surprising to me how many people are focused on their tax refund and not the actual amount of income tax they owe.  The refund completely changes the perception of taxes and it bugs me :lol:  But instead of calling people names for wanting a refund, or thinking in terms of a refund, I think it's better to remind people that's not what taxes are all about.  If you owe 10K in taxes it doesn't matter if you get a 1K refund (you overpaid throughout the year via withholdings) or if you own 1K (you under paid throughout the year) - your tax burden is 10K.

Any discussion about the tax cuts should be done using your effective tax rate year over year - and then if you want to get a big refund go for it 🙂 

 

 

My wife and I have had this conversation a few times, she likes that “refund” and all my life I claim a high amount of dependents (10) and then always owe a couple thousand at tax time. I like having my money now and in my mind making Uncle Sam wait until midnight on April 15 for my money is sweet 

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On 2/13/2019 at 8:21 PM, jabarony said:

Ugh. I suck.  Should've read this BEFORE itemizing all those Salvation Army donations and then not meeting the 24k standard anyways. Didn't realize it was that high. 

Did they make a difference in your state taxes, though?  

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7 hours ago, ghostguy123 said:

Fair tax.  Just be done with it

Is there such thing?

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Just filed, had to wait for my 1099-DIV and 1099-B.  

Despite a few "tax harvesting" loss sales at the end of the year, my capital gains and dividends ended up costing me about 15% of my return.  :rant: (not really ranting, we're talking about $800)

Of course, that's just due to a couple high dividend yielding stocks in the regular brokerage account.  Can't really complain too much, I knew that going in, then sort of forgot about it - much like anyone looking at their return and comparing to last year, then complaining that their return is lower seems to do.  

Still, effective tax rate of -3%, close to the same as last year.  Without the adoption tax credit we'd have been around 1%.  

Edited by -OZ-

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I'm still early in the process but the analysis I received today from my CPA shows my tax liability for 2019 being approximately 60% of what it was in 2018. Won't know the details for awhile but main contributors are the accelerated depreciation on a couple jobs that we would normally had taken over many yearssas well as the relief on profits for small businesses like us. Serious relief for small business if this shakes out like he says. 

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My AGI went up about 3% from last year and my effective tax rate went down about 1%.

I typically like to break even ( +/- $200) but I didn't trust the "extra" money I was getting in my paycheck early in the year so I increased my withholdings and ended up with a refund of $1550.  Had I not changed my withholdings I would have owed around $500.  More evidence that looking at the refund is not the way to do it 😜 

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On 2/18/2019 at 8:17 PM, Steeler said:

My AGI went up about 3% from last year and my effective tax rate went down about 1%.

Finally got my last forms in.  My AGI went up about 10% from last year and my effective tax rate went up about 1% (marginal bracket went from 25 to 22%, so I didn't jump up on bracket).  Federal tax paid went up 18%.  I guess I'm one of the few who is in that hole and hit pretty hard.  Overall I'm paying the feds and getting back a chunk from state - just enough to be $20 in the red.  So a wash.

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Tax went down from 15.5% of income to 13%.  I had to pay a few hundred at filing instead of previously getting some money back.

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 I had to cut a larger check to the government than usual, but my effective tax rate went down despite being in a very high SALT state. 

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Due to the change in homeowners deductions, essentially making owning a home no better then renting, we ended up owing a sizable amount. In years past we have always received a refund. 

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On 2/14/2019 at 1:02 PM, Sand said:

The US govt. started withholding so that they would get their money first.  Given the exact behavior your talked about re: American citizen spending habits, if the UST didn't people would spend it all before tax time.  That said I completely agree that the UST hosed up the withholding tables.  We have historically put trust in their ability to be consistent and they failed.

This isn't really directed at you, I agree with everything you're saying here, but I would just like to point out that the IRS has had major budgetary problems for a few years.  They are significantly hamstrung right now, and have been for a bit.  While I am absolutely a proponent of smaller government, and I think there's a ton of waste in the system, it was not really a surprise to me that they ####ed up the withholding tables, and to a certain extent I don't really blame them for it.  They're doing the best they can with the resources they have at the moment, and tried (and failed) to warn taxpayers that the withholding tables were a disaster.  

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Posted (edited)

We had a lot more expenses this year over last leading to my refund being almost as much as my W-2 earnings for the year (which isn’t more than a minimal salary but for a refund is awesome). When attempting to normalize the expenses to similar year over year it look like the new tax laws and depreciation changes lowered our tax liability about 24% from last year. Awesome savings for a small business. :thumbup:

Edited by GoBirds

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Kind of an interesting situation - my itemized deductions are about $23,800. So Turbo Tax told me to take the Standard Deduction of $24k.

But get this - Maryland still allows you to deduct SALT, but in order to itemize your State Tax return deductions you must also itemize your Federal return.

So I ran it both ways and guess what? By forgoing the extra $200 in federal returns that the Standard Deduction would have saved me and itemizing instead, I make up $1K extra on my Maryland taxes, netting me $800.

I do think it sucks that Turbo Tax isn't smart enough to compute this and would have happily shorted me $800. 

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16 minutes ago, The_Man said:

Kind of an interesting situation - my itemized deductions are about $23,800. So Turbo Tax told me to take the Standard Deduction of $24k.

But get this - Maryland still allows you to deduct SALT, but in order to itemize your State Tax return deductions you must also itemize your Federal return.

So I ran it both ways and guess what? By forgoing the extra $200 in federal returns that the Standard Deduction would have saved me and itemizing instead, I make up $1K extra on my Maryland taxes, netting me $800.

I do think it sucks that Turbo Tax isn't smart enough to compute this and would have happily shorted me $800. 

I'm guessing Maryland lawmakers' phones are going to be ringing off the hook from angry taxpayers because of this.  What a silly law especially in light of the federal tax reform.

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7 minutes ago, Pipes said:

I'm guessing Maryland lawmakers' phones are going to be ringing off the hook from angry taxpayers because of this.  What a silly law especially in light of the federal tax reform.

I don't know - Maryland is sitting on an extra $400 million this year, because of the lost federal deductions in our relatively high-income, high-tax state. Because rich people can deduct less, they're paying taxes on more of their income and Maryland is reaping the rewards.

I am in a fairly unique (and terrible) place that my allowable deductions are literally 99.98 of the standard deduction. Sure does suck not being able to deduct the additional $15k in SALT that I could before.

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Guys that e-filed and had a refund, how long did it take for refund to hit your account?

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Posted (edited)
1 hour ago, GoBirds said:

Guys that e-filed and had a refund, how long did it take for refund to hit your account?

< 3 weeks

But I filed mid-February

Edited by Keerock
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On 4/9/2019 at 3:18 PM, The_Man said:

I am in a fairly unique (and terrible) place that my allowable deductions are literally 99.98 of the standard deduction. Sure does suck not being able to deduct the additional $15k in SALT that I could before.

You're not unique.  I'm almost exactly where you are - ended up at $24,800, I think.  I lost 16k of deductions versus last year, which cost me a few thousand in taxes.  You're right, though, right at 24k is the worst place to be.

This year we'll be prepaying church contribution in 2019 for 2020 to capture itemized deductions this year and then being way under next year.   You want to be as far away from the 24k as possible, one way or another.  I figure that timing of contribution will save me 3-4k over the next two years.  Crazy, but them's the rules, as I learned.  

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Posted (edited)
On 2/2/2019 at 7:10 AM, The_Man said:

I got F’ed by a couple grand. Lost about $8k in deductions so I owe more in taxes. And because they decreased my withholding the gap is even bigger. Yeah, I know I got the extra $ during the year but it’s still a kick in the nads to write a check for $4 or 5k 

Try $20K.  That's fun. SALT ($10K in CA - yeah right) and I guess the changes in withholdings totally screwed us. Last year I'm going to be a pigeon playing the wrong side of this game.  Several businesses and pass throughs next year.

Edited by Judge Smails

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the personal exemption part was something that i hadn't really paid attention to and that kind of banged us.  we gained in some places, lost in others.  had to pay, but effective tax rate actually went down slightly.

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Ended up having to pay in $894 to federal and  $440 into state.  Had to pay $3500 in last year to federal so Trump's plan definitely helped my family. Made more this year and payed less.

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11 minutes ago, snellman said:

Ended up having to pay in $894 to federal and  $440 into state.  Had to pay $3500 in last year to federal so Trump's plan definitely helped my family. Made more this year and payed less.

:confused:

While you probably paid less, if there above is the only info you have, you don't know enough to tell.

You need to account for your total withholding. 

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On 4/10/2019 at 7:32 PM, Keerock said:

< 3 weeks

But I filed mid-February

Same. State took just over a month.

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1 minute ago, Walking Boot said:

:confused:

While you probably paid less, if there above is the only info you have, you don't know enough to tell.

You need to account for your total withholding

You need to account for total taxes. 

Snell may or may not have done that, i know people who paid less.

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3 hours ago, Walking Boot said:

:confused:

While you probably paid less, if there above is the only info you have, you don't know enough to tell.

You need to account for your total withholding. 

My total tax last for 2017 was 13k, my tax for last year was 9.8K. My household made 2K more last year than the year before.

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We got ####ED!   9K owed this year.  

 

I guess I will not be buying a simple battery this year for work since nothing is deductible.   No mileage, no unreimbursed expenses, no deductions for work items, clothes, expenses, recertifications, licensure, nada.   FML

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Had to use the standard deduction, but overall my amount owed went down by $5k even though income went up a lot more. Effective tax rate went from 25% to 21%. My deductions were around half due to the SALT limits, but I did finally get the child tax credit for 2.25 of my 3 kids. Based on my effective tax rate, that $4500 credit was basically $22,500 in deductions so that alone almost equaled it.

Overall, Trump saved me some a lot of money. I do need to get my W-4 setup correctly. I'm tired of owing money.

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We made 32k more and paid 18k more in taxes. Our $8500 refund the last 8~ years became $750. No work deductions absolutely crushed us. Ridiculous.

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Posted (edited)

Fed tax effective rate fell to 9.8%.

2014 12.0%

2015 12.2%

2016 12.1%

2017 12.6%

Child tax credit going from $400 to $4000 was the major difference.

Edited by cap'n grunge
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Fed tax effective rate was 11%  owed $1000 because of withholding changes.

I think the previous year was 12%.  The last 10 years has been in the 9-12% rate. 

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Fed tax rate increased to 19% from 16.77% last year. Made an additional 16k on AGI, and paid an additional 3k in taxes. Fed changed tax rate in bracket from 25% in 2017 to 22% this year. 

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22 hours ago, Walking Boot said:

:confused:

While you probably paid less, if there above is the only info you have, you don't know enough to tell.

You need to account for your total withholding. 

seeing this over and over again really opens your eyes to how many people dont get it.

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Posted (edited)
18 hours ago, SHIZNITTTT said:

We got ####ED!   9K owed this year.  

 

I guess I will not be buying a simple battery this year for work since nothing is deductible.   No mileage, no unreimbursed expenses, no deductions for work items, clothes, expenses, recertifications, licensure, nada.   FML

What you owe or get back at tax time is not the measure.  This could just be a withholding issue.

If you did not itemize the above list, I assume the standard deduction was greater than your itemized total... meaning you came out ahead using the new standard deduction?

 

Edited by matuski

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AGI up $24k. Tax liability down $3,200. First time I took standard deduction in many many years. No state taxes - Texas.

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Had to file an amended return, hopefully the wife took it to the post office today.

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49 minutes ago, matuski said:

What you owe or get back at tax time is not the measure.  This could just be a withholding issue.

If you did not itemize the above list, I assume the standard deduction was greater than your itemized total... meaning you came out ahead using the new standard deduction?

 

Was told by our tax guy that we were not allowed to deduct those expenses this year.  For over 20 years we have deducted the expenses that were not reimbursed from our employer.  

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16 hours ago, Slider said:

We made 32k more and paid 18k more in taxes. Our $8500 refund the last 8~ years became $750. No work deductions absolutely crushed us. Ridiculous.

this

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27 minutes ago, SHIZNITTTT said:

Was told by our tax guy that we were not allowed to deduct those expenses this year.  For over 20 years we have deducted the expenses that were not reimbursed from our employer.  

What kind of expenses are you referring to?

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I actually make a rough estimate of all taxes paid. First I note my Gross Income, Adjusted Gross Income, and then my Taxable Income from Turbo Tax.

Then I note my Federal Income Tax and also separately my Payroll Taxes from my last paystub.

Then I note my State Income Tax from Turbo Tax, my Property Tax from my mortgage statement, then I estimate my paid Sales Tax (adding expenses by taxable categories from Mint) and my Gas Tax (by estimating the # of gallons purchased and multiplying by the 76.7 cents a gallon I'm taxed in Los Angeles) to get my total taxes paid. 

Came out to almost 30% of my gross this year. 27% last year. My federal taxes went down in rate, but I earned more in other categories so overall my % went up.

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